Guest post by Daniel Matoušek
Until now, there has not been much literature on the recording industry in the former Czechoslovakia. Particularly the history after the 1950s is not mapped at all yet. However, there are two books about the early music industry in the Czech lands that stand out in scope and in depth of detail: “Fonogram I” and “Fonogram II” by Czech record collector and sound industry historian Gabriel Gössel. The following short series of four articles is thus a look into the history of early gramophone industry in the Czech lands as described in these two volumes.
This third part covers the 1930s, when Czechoslovakia was suffered from world economic crisis which led to the oligopolization of the music industry.
In the mid twenties, electrical recording along with economic growth expanded the market and gave birth to two big Czech companies: Esta and Ultraphon. From the beginning, Esta was rather oriented on popular repertory and therefore was targeted at the rural population. Ultraphon, a formerly Czech branch of a German company, became independent after the spectacular crash of the parent company Küchenmeister in 1931. In contrast to Esta, Czech Ultraphon focused on a more polished repertory and higly regarded performers.
Esta and Ultraphon entered a highly competitive market. The market leader was Parlophon. Despite its history reached far back to the beginning of the century, the label appeared in Czechoslovakia only in 1929 when a distribution deal was made with Novitas. The label was owned by the legendary music business pioneer Diego Fuchs who managed to negotiate record deals with some of the most prominent artists of the time. A usual price of Parlophon discs was 27 Kc in 1930 – slightly above the average. Due to a top rated repertory and high profiled artists, business went well for Parlophon and initially the market entry of Esta and Ultraphon did not affect its supremacy. However, when world economic crisis also severely hit Czechoslovakia Parlophon completely stopped recording new Czech repertory. Many artists, which were formerly signed with the label, changed to Esta and Ultraphon. In 1936, Parlophon released its last Czech records and mutated into a distribution company of imported records from Britain.
The second main player in the Czechoslovakian market was Homocord. Homocord was a sublabel of the Lindström conglomerate. It entered the market already in the early twenties and even established a pressing facility in Prague. Homocord’s heydays, however, began when Otto Fischl was replaced by Emil Schmelkes in 1929. Schmelkes was the former head of the Vox record label, which went bankrupt in 1929. Under his guidance Homocord aggressively gained market share but eventually fell victim of its rampant growth. It had to file bancruptcy and was deleted from the registry of companies in 1935. Despite Schmelkes was responsible for two bancruptcies he was still considered a competent manager. After Homocord had gone out of business, he was immediately asked to head Esta.
In this context, it should be mentioned that the deep economic depression was exacerbated by the protectionist policy of the Czechoslovakian government in the early 1930s. In order to protect domestic production during the worst years of the world economic crisis government imposed high duties on all imports that also negatively affected the recording industry, which mainly relied on imported records. Initially import duties on imported records were imposed in 1931. In 1933, however, the tariff was increased six-fold (Kotek 1998:21). This was a death blow to almost all foreign companies that eventually had to leave the Czechoslovakian market.
Story of Esta
The concept of establishing an indigenous Czech record company was formed by a group of businessmen in Prague, who were involved in the wood trading company Foresta. In 1930, Josef Bursik, vice-director of the Commerce Bank in Prague, real estate agent Egon Bondy (who contributed a great deal of the equity but already left the enterprise in 1933) and businessman Rudolf Hajek (the company’s later director) set up office in a modest one-floor building in Holesovice – a then village nearby Prague. The newly formed company was called Esta and initially should release its catalogue on unbreakable, elastic discs made from celluloid which was the technological state-of-the-art. Esta started licensing and pressing Kalliope matrices, but the celluloid records were of poor quality and it soon became obvious that celluloid would not be the future of recording industry. At the end of 1930, Esta reported that they would start manufacturing usual shellac discs instead. However, this strategic shift was almost to late. In 1931, the record company was faced with serious financial troubles. Jan Valentini of competing Ultraphon label later remembered that Esta’s debt had totaled up to 9 million crowns in 1931 (Kotek 1998: 21).
Esta’s first own recording (made from their own matrices) was supposedly a disc with two songs from the popular movie C. a K. polni masalek. They were released in a Czech and a German version on the day when the movie premiered in October 1930. Struggling with the economic downturn and heavy-weight competitors, which had launched cheap labels such as Slavia, Nolaphon, Sortima, Lido to name only a few, Esta started to distribute its records to foreign markets (Poland, Hungary and Germany) and bought up cheap matrices of bankrupt German Ultraphon. However, two major events eventually helped Esta to survive. On the one hand the Czechoslovakian Sokol Club (a popular sport’s club) ordered large quantities of Esta records and on the other hand the German Crystalate company licenced Esta records for its Kristall discs. In addition, the Czech Academy of Sciences commissioned Esta to press historic Pathé discs and to record new folkloristic material in 1933.
In 1934, the most turbulent period in Esta’s history came to an end. Nevertheless its economic situation was very strained and therefore Esta entered into merger talks with main competitor Ultraphon. In 1935, however, Rudolf Hayek who initiated the merger talks was replaced by Emil Schmelkes as the company’s director. Schmelkes, who was the former head of Homocord, immediately stopped the negotiations with Ultraphon. He restructured the company and started to press licenced discs of Brunswick and Polydor. When in 1937 the financial situation had not substantially improved, the two remaining owners, Hajek and Bursik, agreed to sell their shares to the biggest creditor, the Czechoslovakian Bank of Commerce for a symbolic Czech Crown. A year later, Esta was bought up by the far biggest book and magazine publishing house in Czechoslovakia, Melantrich. In fact, Melantrich, did not only buy Esta but even the entire Bank of Commerce. Gössel believes that Melantrich may have realized the economic potential of the recording industry already in 1935 when it commissioned Ultraphon to release seven records with hiking songs to support its youth magazine Ahoj na nedeli. The records turned out a huge commercial success.
The new owner decided to raise the prices and also confined the rebate policy for retail and wholesale. Melantrich successfully relaunched Esta and owned the label until 1946, when the Czechoslovakian music industry was nationalized.
Closely connected to Esta was the German Polydor label. Polydor was the export label of Deutsche Gramophon Gesellschaft (DGG), and was distributed in Czechoslovakia apart from DGG’s representation in Prague by Christl & Schmidt, which operated in a small town called Cheb. Due to the economic depression in Germany, DGG had tried to expand to the Czechoslovakian market in 1932. The Polydor label mainly released records with Czech repertory, which were recorded and pressed in Esta facilities. From 1935 to 1943 DGG used Esta plants also for Czech releases of Brunswick jazz – or so called “dance music” – records and Esta and Polydor even issued a shared Czechoslovakian catalogue in this period.
Story of Ultraphon
At the beginning of the 20th century, Heinrich Küchenmeister founded the Küchenmeister Ultraphon Maatschappij AG as a producer of phonographs (called ultraphones) in the Netherlands. It soon expanded to Germany as Deutsche Ultraphon AG. In 1927, the director of the Austrian subsidiary was looking for an agent in Prague to sell Ultraphon equipment in Czechoslovakia. Eventually he contracted with Avus, a trade company for vacuum cleaners and electrical appliances, which was owned by Gustav Susicky. When in 1928 Ultraphon entered the recorded music market by pressing Ultraphon records, Mr. Susicky was offered the exclusive distribution for Czechoslovakia. Therefore, Susicky as well as the brothers Jan and Frantisek Valentini founded a limited company called Ravitas in 1929. Later on, when Susicky left the company the Valentinis became heads of the now transformed stock company Ultraphon A.S.
The main goal of Ravitas was to create a Czech music catalogue. Initially Ravitas had to record the Czech repertory in Ultraphon’s record studios in Berlin. Some recordings, however, were also produced in an improvised studio in Prague with support by German sound engineers. The intensive recording activity – 160 Czech records were produced just in 1930 – was overshadowed by financial turbulences. In 1931, the Küchenmeister parent company in the Netherlands was bancrupt and the German subsidiary was illiquid too. German Ultraphon, thus, sold the assets of the Czech subsidiary along with a large stock of German matrices (22,000 Orchestrola, 111,000 Ultraphon, 10,000 Ultraphon with 30cm diameter and 9,000 Musica Sacra) for 1 million Kc to Ravitas. Since Ravitas did not have that amount of money Ultraphon accepted a payment in two installments over two years. In April 1931, the Czechoslovakian Ministry of Commerce eventually stepped in and allowed Ravitas to bring all its assets and liabilities in to a new stock company, Ultraphon A.S., which started its operation on January 1st, 1932. The Valentinis took a high risk with their strategic move but succeeded at the end – also by a good portion of luck. Literally one song out of Ultraphon catalogue solved all financial problem. “Cikanka” [Gypsy Girl] by Karel Vacek allegedly sold incredible 100,000 copies altogether (about 50,000 by the Ultraphon label alone).
In the following Ultraphon increased its market share to 36% in 1933, when the company sold about 300,000 records of its Ultraphon, Orchestrola and Artona labels. In the same year a record studio was established in Prague. In the following years the sales were almost high on a level of about a quarter a million. The sales’ slumps in specialized retail shops could be compensated by increased sales of budget priced records in department stores. Ultraphon even launched a second budget label, Selekton, beside the still existing Artona label.
At that time also foreign companies became interested in distributing Ultraphon records mainly in Austria and Germany. In Vienna, for instance, the Phönix label successfully sold Ultraphon records to the Czech minority. Ultraphon also tried to get the licences for pressing DGG’s Brunswick and Polydor labels, in which main competitor Esta succeeded at last. However, Utraphon had already a licensing agreement with Telefunken – the main competitor of DGG in Germany.
Although Ultraphon successfully performed in the Czech part of the country, the economic situation in less developed Slovakia was somewhat worse. The company was forced to close its warehouse in Zilina and had to hire a travelling man for the Slovakia territory instead. However, compared to main competitor Esta, which had to file for insolvency, Ultraphon was on the sunny side of the street. In 1937, Ultraphon’s factory run at full capacity and pressed records in two shifts, which resulted in a turnover of 6 million Kc.
Part of Ultraphon’s success was its close relation to German Telefunken Schallplatte GmbH. Ultraphon was the general representation of Telefunken, which also included a lending deal for Telefunken recording equipment. Telefunken was founded in 1903 as a joint venture of AEG and Siemens & Halske to produce telegraphs, telephones and the like. Telefunken entered the recorded music market not until 1932, when it bought matrices and other assets from insolvent German Ultraphon for 100,000 RM (“Reichmark”). As a producer of sound films (“Klangfilm”) and radio equipment, Telefunken gained control over all sectors of the audio-visual industry in the German Reich. In 1933, Telefunken entered into a close cooperation with Czech Ultraphon by pressing records with German artists for Telefunken. Telefunken records even were offered in the Ultraphon catalogues.
The second label of Czech Ultraphon was Orchestrola. Originally, Orchestrola was a budget price label by the Orchestrola-Vocalion Gesellschaft from 1928-1932. Orchestrola was partly owned by the Küchenmeister conglomerate by British Vocalion Records. When Küchenmeister and German Ultraphon collapsed in 1931, the Orchestrola label disappeared in Germany too. However, Czech repertory was also released on Orchestrola records in 1930, distributed by Valentinis’ Ravitas company. Therefore, Orchestrola survived in Czechoslovakia as a sublabel of Czech Ultraphon, but was soon renamed Selekton.
The Czechoslovakian Music Industry in the 1930s
As mentioned above, two main factors affected the music industry in Czechoslovakia in early 1930s. On one hand there was the economic depression, and on the other hand the protectionist policy of the CSR governement forced foreign record companies to leave the country, which was then dominated by only two conglomerates – Esta and Ultraphon – which fiercely competed to obtain a reasonable market share. However, some foreign record companies tried to exploit a loophole in the legislation on import tariffs, which did not apply to imported matrices that were pressed in CSR. Therefore, some foreign labels directly contracted with pressing plants within the CSR, and some even managed to hire facilities in order to press their entire catalogues there. The latter strategy was operated by DGG’s Polydor label that recorded the Czech repertory in Vienna and Berlin, but pressed the records in the CSR by subcontracting with Esta’s pressing plants in 1932.
Pallas company managed the situation even better and built a pressing plant in a small village nearby the city Karlovy Vary where the records could be directly sold to the German minorities. Pallas, initially had operated as a subsidiary of the German company Clement Claus AG since 1932. In the same year, Pallas cut the first records of Czech repertory in the Esta studio in Prague. One might suspect that these records were Esta’s own unsuccessful recordings, which Esta did not want to release. The Pallas records were usually budget priced and of inferior quality compared to Esta releases.
The most successful foreign record company that operated in the CSR despite the protectionist tariff poliy was the British Gramophone Company (later EMI) with its own and well-established pressing plant in Usti nad Labem.
Other companies fought hard despite the worsening conditions. Probably the only way to compete was to sell budget priced records. The early 1930s, therefore, witnessed a price war in which the regular prices of records decreased by more than 50% within one or two years. Kotek (1998: 20) even suspects a price cartel among foreign companies was targeted against Esta and Ultraphon.
In 1931, the price of Ultraphon records was 25 Kc and 36 Kc for high-profiled “red label” devoted to opera and classic music. At the end of 1932, Ultraphon launched the new budget label Artona whose records were sold for 15 Kc with different titles for the German and Czech Ultraphon catalogues. Ultraphon’s second budget label Selekton that was introduced shortly thereafter with a price of 15 Kc which soon was cut to 12.50 Kc.
Esta sold its records in 1930 at 25 Kc in 1930, but decreased the prices to 12.50 Kc in 1933 In the mid-thirties the prices were increased to 15 Kc. Esta’s price policy was criticzed by the Czech collecting society OSA, which threatened to withdraw the licensing if the basic price would not raised from 12.50 Kc to 16 Kc.
The impact of the protectionist policy and the destructive price competition can also be documented by import statistics of records highlighted in Lochmann (1955). Within five years the value of imported records decreased by nearly 95 percent.
The economic crisis did not only cause a unhealthy price competition but also a new way to advertise music products. In the early 1930s, so called “advertised records” of very popular street musicians were released. These records of various artists sold very well not at least because of the extremely low price since the interpreters were paid next to nothing. Those who turned out to be commercially successful, gained a recording contract. It was a kind of casting show without media support but by advertising money of big Czech companies. Thus, myriads of mostly untrained amateur singers found their way to the record studios with the hope to become a record star.
Despite the economic downturn, the number of record pressing plants increased in the first half of the 1930s due to the protectionist tariff policy. As noted above, Esta, Ultraphon and Pallas built new facilities for their as well as licensed records, and Deutsche Grammophon continued its business in Usti nad Labem. The record pressing plant in Obergrund which was established by Herman Maasen was taken over by his longtime business partner Herman Eisner after Maasen’s death in 1931. Eisner who also was the head of the Artiphon record company and thus renamed the new firm to Artiphon-Eisner & Co. Artiphon was partly financed by Columbia Graphophone Co. (later EMI). Josef Vrba who was Columbia’s representative in Czechoslovakia was also head of Artiphon’s Czech division. Gössel assumes the takeover was likely to be an idea of EMI in order to attack Esta’s and Ultraphon’s increasing control over the Czechoslovakian record market. In the Obergrund factory more than twenty labels were pressed from imported Artiphon matrices from 1932 to 1935. However, after the import tariffs were imposed the number labels considerably decreased. In 1935, Artiphon-Eisner & Co. ceased its operations in the CSR. Parlophon, Odeon and other Lindström labels, which were represented by Diego Fuchs’ Novitas company, followed a year later. Homocord already left the Czech market in 1934. In 1936, thus, an oligopoly of three record labels operated in the CSR: the domestic Esta and Ultraphon as well as the British Gramophone Co., which was a already a subsidiary of EMI.
In the next and last part of the series the development during World War II and the post-war nationalization of the Czech recording industry is highlighted.
Gössel, Gabriel (2001). Fonogram I. Prague: Radioservis.
Gössel, Gabriel (2006). Fonogram II. Prague: Radioservis.
Gramofonovy prumysl. http://www.usti-nl.cz/dejiny/19stol/ul-5-31.htm (accessed Oct 20, 2011). Note: official webpage of Usti nad Labem, from archival sources of the city.
Kotek, Vladimir (1998). Dejiny ceske popularni hudby a zpevu, Vol. 2: 1918–1968. [A history of Czech popular music and song]. Prague: Academia.
Lochmann, Adolf (1955). Gramofnova deska [The Gramophone disc]. Praha: Prace.
 Similarly, the Ultraphon subsidiaries in France, Albania, Italy, Belgium, Switzerland and Luxemburg became independent business entities, too
 Travelling men were also hired for Bohemia and Moravia in order to reach different customers all over the country to offer them records for a favorable prices.